It is difficult to compete equally for every type of business. It makes excellent business sense to develop a "differential competence". You will be able to say to clients "We have specialist expertise and products tailored for your business".
The many advantages of developing a niche include:
- Products and services that cannot be matched by those of competitors
- A high degree of specialist market knowledge
- Focus on high probability sales prospects
- Providing critical mass in a niche segment that encourages insurers to provide scheme products
- Opportunity to charge premium rates and secure long-term arrangements with clients.
Potentially successful niches make logical sense.
A good niche will offer the chance for a brokerage to demonstrate its distinct abilities, and be in a growing market sector. Good niches are often those that are poorly served, or havebeen overlooked by competitors.
Where are they?
To succeed in the niche market, you should ask yourself the following questions:
- Which industries should we focus on?
- Size of company?
- Geographical areas?
- Market segments?
- Scale of insurance needs?
- Range of requirements?
- Do we want to focus on clients who prefer quality of service, convenience, flexibility or price?
- Length of insurance arrangements?
- Should we target companies with formal or informal purchasing processes? n Should we concentrate on servicing existing clients, or acquiring new ones?
- Do we adopt a highly tailored approach, or a more efficient – but less client-centred-standardised approach?
- Lots of small sales, or a few large ones?
- What balance will we strike between the speed and efficiency of solutions, and the quality and fit to our clients' needs?
- Should we concentrate on clients who show a high or low degree of loyalty to insurance suppliers?
- Should we select risk-avoiding or risk-seeking clients?
A cut above the rest
The most successful brokers are concentrating mainly on commercial business. Most clients are small to medium-sized businesses in a particular geographical region. Most top brokers sell around 10-15% Personal Lines business.
- This is taken from The Cutting Edge – Part 3. Available from your local CGU branch.